New Accounting Pronouncements

12 Months Ended

Dec. 31, 2015

New Accounting Pronouncements

2. New Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, the guidance will require additional disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers.  This guidance will be effective for the company beginning in 2018, with early adoption permitted in 2017, and will allow for either full retrospective adoption or modified retrospective adoption. The company expects to adopt this guidance effective Jan. 1, 2018, and is continuing to evaluate the available adoption methods and the impact of the adoption of this guidance on its financial statements, but does not expect the impact to be significant.

Presentation of Debt Issuance Costs

In April 2015, the FASB issued guidance regarding the presentation of debt issuance costs on the balance sheet. Under the new guidance, an entity is required to present debt issuance costs as a direct deduction from the carrying amount of the related debt liability rather than as a deferred charge (i.e., as an asset) under current guidance. In August 2015, the FASB amended the guidance to include an SEC staff announcement that it will not object to a company presenting debt issuance costs related to line-of-credit arrangements as an asset, regardless of whether a balance is outstanding. This guidance will be effective for the company beginning in 2016 and will be required to be applied on a retrospective basis for all periods presented. As of Dec. 31, 2015, $27.7 million of debt issuance costs, which does not include costs for line-of-credit arrangements, are included in the “Deferred charges and other assets” line item on the company’s Consolidated Condensed Balance Sheet. The guidance will not affect the company’s results of operations or cash flows.

Disclosure of Investments Using Net Asset Value

In May 2015, the FASB issued guidance stating that investments for which fair value is measured using the NAV per share practical expedient should not be categorized in the fair value hierarchy but should be provided to reconcile to total investments on the balance sheet. In addition, the guidance clarifies that a plan sponsor’s pension assets are eligible to be measured at NAV as a practical expedient and that those investments should also not be categorized in the fair value hierarchy. TECO Energy’s pension plan has such investments as disclosed in Note 5. This standard will be required for the company beginning in 2016. As early adoption is permitted, the company adopted the standard for its 2015 fiscal year and applied the presentation on a retrospective basis for all periods presented in the pension plan assets fair value hierarchy. The guidance did not affect the company’s balance sheets, results of operations or cash flows.

Measurement Period Adjustments in Business Combinations

In September 2015, the FASB issued guidance requiring an acquirer in a business combination to account for measurement period adjustments during the reporting period in which the adjustment is determined, rather than retrospectively. When measurements are incomplete as of the end of the reporting period covering a business combination, an acquirer may record adjustments to provisional amounts based on events and circumstances that existed as of the acquisition date during the period from the date of acquisition to the date information is received, not to exceed one year. The guidance will be effective for the company beginning in 2016 and will be applied prospectively. The guidance will not affect the company’s current financial statements. However, the company will assess the potential impact of the guidance on future acquisitions.

Balance Sheet Classification of Deferred Taxes

In November 2015, the FASB issued guidance regarding the classification of deferred taxes on the balance sheet. To simplify the presentation of deferred income taxes, the new guidance requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than be classified as current or noncurrent under current guidance. The guidance will be required for the company beginning in 2017 and may be applied on a prospective or retrospective basis. As early adoption is permitted, the company adopted the standard in December 2015 and applied the balance sheet presentation on a prospective basis. Therefore, prior period balance sheets were not retrospectively adjusted. The guidance did not affect the company’s results of operations or cash flows.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued guidance related to accounting for financial instruments, including equity investments, financial liabilities under the fair value option, valuation allowances for available-for-sale debt securities, and the presentation and disclosure requirements for financial instruments. The company does not have equity investments or available-for-sale debt securities and it does not record financial liabilities under the fair value option. However, it is evaluating the impact of the adoption of this guidance on its financial statement disclosures, including those regarding the fair value of its long-term debt, but it does not expect the impact to be significant. The guidance will be effective for the company beginning in 2018.

Leases

 In February 2016, the FASB issued guidance regarding the accounting for leases. The objective is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet for leases with a lease term of more than 12 months. In addition, the guidance will require additional disclosures regarding key information about leasing arrangements. Under the existing guidance, operating leases are not recorded as lease assets and lease liabilities on the balance sheet. The dual model for income statement classification is maintained under the new guidance and as a result is expected to limit the impact of the changes on the income statement and statement of cash flows. This guidance will be effective for the company beginning in 2019, with early adoption permitted, and will be applied using a modified retrospective approach. The company is currently evaluating the impacts of the adoption of the guidance on its financial statements.

Tampa Electric Company [Member]

New Accounting Pronouncements

2. New Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, the guidance will require additional disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. This guidance will be effective for TEC beginning in 2018, with early adoption permitted in 2017, and will allow for either full retrospective adoption or modified retrospective adoption. TEC expects to adopt this guidance effective Jan. 1, 2018, and is continuing to evaluate the available adoption methods and the impact of the adoption of this guidance on its financial statements, but does not expect the impact to be significant.

Presentation of Debt Issuance Costs

In April 2015, the FASB issued guidance regarding the presentation of debt issuance costs on the balance sheet. Under the new guidance, an entity is required to present debt issuance costs as a direct deduction from the carrying amount of the related debt liability rather than as a deferred charge (i.e., as an asset) under current guidance. In August 2015, the FASB amended the guidance to include an SEC staff announcement that it will not object to a company presenting debt issuance costs related to line-of-credit arrangements as an asset, regardless of whether a balance is outstanding. This guidance will be effective for TEC beginning in 2016 and will be required to be applied on a retrospective basis for all periods presented. As of Dec. 31, 2015, $18.1 million of debt issuance costs, which does not include costs for line-of-credit arrangements, are included in “Deferred debits” on TEC’s Consolidated Condensed Balance Sheet. The guidance will not affect TEC’s results of operations or cash flows.

Disclosure of Investments Using Net Asset Value

In May 2015, the FASB issued guidance stating that investments for which fair value is measured using the NAV per share practical expedient should not be categorized in the fair value hierarchy but should be provided to reconcile to total investments on the balance sheet. In addition, the guidance clarifies that a plan sponsor’s pension assets are eligible to be measured at NAV as a practical expedient and that those investments should also not be categorized in the fair value hierarchy. TECO Energy’s pension plan, in which TEC participates, has such investments as disclosed in Note 5. This standard will be required for TEC beginning in 2016. As early adoption is permitted, TEC adopted the standard for its 2015 fiscal year and applied the presentation on a retrospective basis for all periods presented in the pension plan assets fair value hierarchy. The guidance did not affect TEC’s balance sheets, results of operations or cash flows.

Measurement Period Adjustments in Business Combinations

In September 2015, the FASB issued guidance requiring an acquirer in a business combination to account for measurement period adjustments during the reporting period in which the adjustment is determined, rather than retrospectively. When measurements are incomplete as of the end of the reporting period covering a business combination, an acquirer may record adjustments to provisional amounts based on events and circumstances that existed as of the acquisition date during the period from the date of acquisition to the date information is received, not to exceed one year. The guidance will be effective for TEC beginning in 2016 and will be applied prospectively. The guidance will not affect TEC’s current financial statements. However, TEC will assess the potential impact of the guidance on future acquisitions.

Balance Sheet Classification of Deferred Taxes

In November 2015, the FASB issued guidance regarding the classification of deferred taxes on the balance sheet. To simplify the presentation of deferred income taxes, the new guidance requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than be classified as current or noncurrent under current guidance. The guidance will be required for TEC beginning in 2017 and may be applied on a prospective or retrospective basis. As early adoption is permitted, TEC adopted the standard in December 2015 and applied the balance sheet presentation on a prospective basis. Therefore, prior period balance sheets were not retrospectively adjusted. The guidance did not affect TEC’s results of operations or cash flows.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued guidance related to accounting for financial instruments, including equity investments, financial liabilities under the fair value option, valuation allowances for available-for-sale debt securities, and the presentation and disclosure requirements for financial instruments. TEC does not have equity investments or available-for-sale debt securities and it does not record financial liabilities under the fair value option. However, it is evaluating the impact of the adoption of this guidance on its financial statement disclosures, including those regarding the fair value of its long-term debt, but it does not expect the impact to be significant. The guidance will be effective for TEC beginning in 2018.

Leases

 In February 2016, the FASB issued guidance regarding the accounting for leases. The objective is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet for leases with a lease term of more than 12 months. In addition, the guidance will require additional disclosures regarding key information about leasing arrangements. Under the existing guidance, operating leases are not recorded as lease assets and lease liabilities on the balance sheet. The dual model for income statement classification is maintained under the new guidance and as a result is expected to limit the impact of the changes on the income statement and statement of cash flows. This guidance will be effective for TEC beginning in 2019, with early adoption permitted, and will be applied using a modified retrospective approach. TEC is currently evaluating the impacts of the adoption of the guidance on its financial statements.